S Updating The Conservative Cannabis Stocks Approach

The "seed-to-sale" category of cannabis stocks are  -12.9% MTD and are now-32.5% YTD so we continue to ask, why not consider taking a more conservative approach and invest in the tobacco, beer and liquor companies that have invested heavily in the cannabis industry? They are UP +5.5% MTD and +5.8% YTD, on average, in comparison, and pay dividends to boot.

Note that each constituent has hyperlinks to 3 areas of additional information which are imperative for any individual considering investing in this sector:

  • The company name is hyperlinked to its web site to provide you with a description of the company and an analysis of its stock.
  • The trading symbol is hyperlinked to additional financial data and commentary on the company (where available).
  • The percentage increase YTD is hyperlinked to a chart of the company's stock performance YTD.

The munKNEE Conservative Pot Stocks Index

The 6 tobacco, beer and liquor companies mentioned above are constituents in the munKNEE Conservative Pot Stocks Index. The performance of its constituents are compared below with their associated cannabis stocks so far in December (i.e. MTD), as follows, in descending order, with their respective performances YTD in brackets:

  1. British American Tobacco (BTI) is UP +8.1% MTD (UP +0.8% YTD) and now has a Dividend Yield of 8.0%. 
    • The company has a C$221M investment and product development partnership with Organigram Holdings Inc. (OGI) which is UP +50.4% YTD but pays out no dividend.
  2. Altria Group (MO) is UP +6.8% MTD (UP +15.9% YTD) and now has a Dividend Yield of 7.5%.
    • The company has a 45% stake in Cronos Group Inc. (CRON) which is DOWN -38.6% YTD and pays out no dividend.
  3. Constellation Brands (STZ) is UP +6.4% MTD (UP +11.8% YTD) and now has a Dividend Yield of 1.26%.
    • The company has a 39% stake in Canopy Growth Corporation (CGC) which is DOWN -61.0% YTD and pays out no dividend.
  4. Anheuser-Busch (BUD) is UP +4.3% MTD (DOWN -13.1% YTD) and now has a Dividend Yield of 1.0%.
    • The company has a $100 million joint venture with Tilray Inc. (TLRY) which is DOWN -5.1% YTD but pays out no dividend.
  5. Imperial Brands (IMBBY) is UP +3.3% MTD (UP +6.8% YTD) and now has a Dividend Yield of 12.1%.
    • The company has a 19.9% stake in Auxly Cannabis Group Inc. (CBWTF) which is DOWN -25.0% YTD) and pays out no dividend.
  6. Molson Coors (TAP) stock price remains unchanged MTD (and is now UP +0.9% YTD) and has a Dividend Yield of 3.0%.
    • The company has a 57.5%/42.5% joint venture, called TRUSS, with Hexo Corp. (HEXO) which is DOWN -78.0% YTD and pays out no dividend.

In Summary

  • Stock Performances:
    • the Conservative Pot Stocks Index is UP +5.5% MTD and UP +5.8% YTD while
    • their marijuana partners are DOWN -18.9% MTD and DOWN -45.2% YTD, on average.
  • Dividend Yields:
    • the Conservative Pot Stocks Index constituents have dividends that currently yield 3.5%, on average, while
    • their marijuana partners pay out no dividends.

AdvisorsShares VICE (VICE) ETF

Another similar way to invest indirectly in cannabis stocks is to invest in the AdvisorsShares VICE (VICE) ETF. It is an actively managed ETF (net expense ratio of 0.99%) that invests in companies that derive at least 50% of their net revenue from:

  1. gambling/casino companies: 36%,
  2. restaurant/hospitality industry: 19%,
  3. alcoholic beverage companies (includes Constellation Brands): 17%,
  4. tobacco companies (includes all the tobacco constituents in the Conservative Pot Stocks Index except Imperial Brands): 10%,
  5. video games and eSports sector: 8%,
  6. psychedelic compound-based clinical-stage drug companies: 1%, and
  7. other sectors: 9%

VICE is UP +3.1% MTD and UP +5.7% YTD compared to +5.5% MTD and +5.8% YTD for the munKNEE Conservative Pot Stocks Index.

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